LPD N.Y., LLC v. Adidas Am., Inc.

• Decision Date: 24 September 2022
• Docket Number: 15-CV-6360 (MKB)
• Parties: LPD NEW YORK, LLC, Plaintiff, v. ADIDAS AMERICA, INC. and ADIDAS AG, Defendants.
• Court: U.S. District Court — Eastern District of New York

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LPD NEW YORK, LLC, Plaintiff, v. ADIDAS AMERICA, INC. and ADIDAS AG, Defendants.

No. 15-CV-6360 (MKB)

United States District Court, E.D. New York

September 24, 2022

MEMORANDUM & ORDER

MARGO K. BRODIE, UNITED STATES DISTRICT JUDGE:

Plaintiff LPD New York, LLC commenced the above-captioned action against Defendants Adidas America, Inc. (“Adidas America”) and Adidas AG (“Adidas AG”) on November 5, 2015. (Compl., Docket Entry No. 1.)^[1] On May 4, 2018 Plaintiff filed a Second Amended Complaint (“SAC”), asserting claims for breach of quasi-contract, promissory estoppel, implied license, unjust enrichment, and defamation.2 (SAC, Docket Entry No. 77.)

Defendants now move for partial summary judgment as to (1) Plaintiff's claims for (a) promissory estoppel, (b) quasi-contract, and (c) defamation; (2) sixteen of Plaintiff's affirmative defenses, including (a) trademark abandonment and cancellation, (b) failure to state a claim (c) statute of limitations, (d) waiver, (e) laches, (f) unclean hands, (g) acquiescence, (h) estoppel, (i) failure to mitigate, (j) trademark misuse, (k) descriptive fair use, (1) nominative fair use; (m) unjust enrichment, (n) no damages (o) partnership or joint venture, and (p) comportment with cease-and-desist instruction; and (3) Defendants' counterclaims for trademark infringement and counterfeiting, in violation of sections 32 and 43 the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a).^[2]

For the reasons explained below, the Court (1) denies Defendants' motion as to Plaintiff's promissory estoppel claim for two promises and defamation claim; (2) grants Defendants' motion as to Plaintiff's quasi-contract claims; (3) grants Defendants' motion as to fifteen of Plaintiff's affirmative defenses, but denies Defendants' motion as to Plaintiff's failure to state a claim defense regarding Defendants' unfair and deceptive trade practice counterclaim; and (4) grants Defendants' motion as to its counterclaims for trademark infringement and counterfeiting.

I. Background

The Court assumes the parties' familiarity with the extensive facts and procedural background of the case and provides only the facts pertinent to Defendants' summary judgment motion.

a. Factual background

The following facts are undisputed unless otherwise noted.^[3]

i. Relevant parties

Plaintiff is a New York limited liability company, (SAC ¶ 2), that is in the business of designing and manufacturing “athletic jersey-inspired tee-shirts[,]” (id. ¶ 15). Its founder and sole member is Benjamin Fainlight. (Decl. of Benjamin Fainlight (“Fainlight Decl.”) ¶ 2, annexed to Notice of Pl.'s Mot. For Partial Summ. J., Docket Entry No. 24-4.)

Defendant Adidas AG is a German joint-stock company with its principal place of business in Germany. (SAC ¶ 5.) Adidas America is a Delaware corporation with its principal place of business in Oregon, (see id. ¶ 4), and “directs all U.S. based operations on behalf of Adidas AG,” (id. ¶ 6). Jarrett Mann began an internship at Adidas America after he graduated from Stanford University in 2012. (Defs.' 56.1 ¶¶ 15-16.) After Mann completed his internship in October 2012, Adidas America hired him in an entry level position, as Assistant Product Manager in the Basketball division. (Id. ¶ 17.)

ii. Initial discussions between LPD and Adidas

On October 2, 2013, Mann contacted Fainlight by email to “open up a line of communication in hopes of a future collaborative effort.” (Id. ¶ 19; Mann-Fainlight Emails dated Oct. 2-3, 2013 (“Oct. 2-3 Mann-Fainlight Emails”) 3, annexed to Decl. of Jarrett Mann (“Mann Decl.”) Ex. 3, Docket Entry No. 178-3.) Mann expressed his interest in Plaintiff designing (1) “5 unique styles for some of the most storied college basketball teams,” (“Classics Capsule”), and (2) a “court-to-street campaign” to add the “‘streetwear' status that [Plaintiff] has” to Defendants' brand, (“Collaboration Capsule”), (collectively the “Collaboration”). (Oct. 2-3 Mann-Fainlight Emails 4.) Upon receiving Mann's email, Fainlight researched Mann and discovered that he had recently been a basketball player at Stanford. (Pl.'s Counter 56.1 ¶¶ 20-21.)

Fainlight responded the same day to express Plaintiff's interest in collaborating with Adidas America on an “athletic/street crossover” concept. (Oct. 2-3 Mann-Fainlight Emails 3.) A few days later, Mann and Fainlight spoke on the phone and Mann told Fainlight about his previous experience, including his former basketball career and new position at Adidas America. (Pl.'s Counter 56.1 ¶¶ 21-22; Decl. of Benjamin Fainlight (“Fainlight Dep.”) dated Mar. 4, 2019 162:11- 163:12, annexed to Defs.' Aff. in Supp. of Defs.' Mot. as Ex. 3, Docket Entry No. 217-3.)

After the initial exchange of emails, Plaintiff developed (1) a series of design proposals for the Classics Capsule - which included prints for t-shirts, basketball jerseys, etc., and (2) a series of design proposals for the Collaboration Capsule - which included basketball jerseys, t-shirts, etc. On October 17, 2013, Fainlight provided Mann with preliminary designs for the Classics Capsule. (Mann-Fainlight Emails dated Oct. 7-17, 2013 (“Oct. 7-17 Mann-Fainlight Emails”) 2-3, annexed to Mann Decl. Ex. 5, Docket Entry No. 178-5.) The same day Mann responded to express his “excite[ment]” regarding Fainlight's designs. (Id. at 2.) A month later, Fainlight reached out to Mann to inquire on the “execution of the [C]ollaboration, [and] specifically, how these [pieces] should/will be branded (with both [Plaintiff's] and [Defendants'] logos) and how/where they will be distributed (in [Defendants'] stores/distributors or otherwise).” (Mann-Fainlight Emails dated Oct. 17-Nov. 21, 2013 (“Oct. 17-Nov. 21 Mann-Fainlight Emails”) 3, annexed to Mann Decl. Ex. 6, Docket Entry No. 178-6.) Mann replied, suggesting several possible options for co-branding and retailing the products. (See id. at 2.) Fainlight responded later that day, expressing interest in Mann's retail and co-branding ideas, and requesting a letter of intent for the Collaboration. (Second Mann-Fainlight Emails dated Oct. 17-Nov. 21, 2013 (“Second Oct. 17-Nov. 21 Mann-Fainlight Emails”) 2, annexed to Mann Decl. Ex. 7, Docket Entry No. 178-7.) Mann replied, stating:

I think the letter of intent is perfect. My supervisors will want something as well, so I will work on putting some of this into a document with the purpose of this along with details[,] [which] will be a positive. I will try to turn something around by next week or early December.

(Id. at 1.) Mann also claimed that the NCAA teams were “aligned to wear [pieces from the Classics Capsule] around [January 1^st][,] [b]ut [that] the retail could launch earlier, potentially before holiday time to catch sales and drive momentum.” (Id.)

In January of 2014, Mann reiterated his interest in developing the Collaboration with Plaintiff and offered to supply Plaintiff with Defendants' shoes for a fashion “lookbook and showing.” (Mann-Fainlight Emails dated Jan. 22-23, 2014 (“Jan. 22-23 Mann-Fainlight Emails”) 1-2, annexed to Mann Decl. Ex. 9, Docket Entry No. 178-9.) Fainlight asked about the letter of intent again on March 3 and March 11, 2014 and Mann responded that “[t]he letter of intent is currently a work in progress.” (Mann-Fainlight Emails dated Feb. 25-Mar. 11, 2014 (“Feb. 25-Mar. 11 Mann-Fainlight Emails”) 1, annexed to Mann Decl. Ex. 11, Docket Entry No. 178-11.) Mann never provided Fainlight with a letter of intent. (Pl.'s Counter 56.1 ¶ 59.)

b. Plaintiff's creation of physical samples and discussion of profits

On January 23, 2014, Fainlight contacted Mann “to make sure [Plaintiff] got the OK on everything so [Plaintiff] can start sampling the tees and prints.” (Jan. 22-23 Mann-Fainlight Emails 1.) Mann advised that he was going to “get moving on those samples this week.” (Id.) The next month, Fainlight sent Mann a concept proposal for the Collaboration Capsule. (Feb. 25-Mar. 11 Mann-Fainlight Emails at 2.) He also expressed his interest in travelling to Oregon to meet with Mann and show the samples in person. (Id.) Mann expressed his approval of Plaintiff's direction with the Collaboration and his interest in meeting with Fainlight to “see this concept through.” (Id. at 1.)

On March 11, 2014 Fainlight asked about a letter of intent again and also asked about a “press strategy for the [Collaboration.” (Mann-Fainlight Emails dated Feb. 25-Mar. 14, 2014 (“Feb. 25-Mar. 14 Mann-Fainlight Emails”) 1, annexed to Mann Decl. Ex. 13, Docket Entry No. 178-13.) Mann responded that:

The letter of intent is currently a work in progress, [and that he is] currently working on clearing all development boundaries and expecting finalized samples [for the Collaboration] . . . in the next two weeks. Of which [he] will send [Plaintiff] a full set along with some other blank samples that [Plaintiff] can embellish and potentially elevate for additional pieces.

(Id. at 3.) Mann also provided Fainlight with guidance on sales and profits. On March 14, 2014, he advised that:

As far as the sales and profits, on [Defendants'] side [their] finished products [from the Classics Capsule] will be issue[d] to the teams at no cost. [Adidas America] would also purchase all of the [C]ollaboration product for . . . teams to have. [Defendants] have a licensed apparel side that would sell the game shorts and jersey's [sic] and those royalties would go to the schools. However the [Collaboration Capsule] profits would likely be primarily profits to [Plaintiff] . . . [but] [Mann] will have [to] ask [his] bosses to confirm this, [and] once the mission statement is complete those details will be in that document.

(Id. at 2.) Fainlight thanked Mann for the clarification and asked that Mann update him on “the specifics and that everything ...